Personal Proper t

ySecur ityAct( RA11057) Thef ol

lowi
nghav ealsobeenamended
ThePPSA i sanactst rengthening the i
nsofar as t he provi
sions t her
eof ar e
secured t r
ansact i
ons l egalf ramewor ki nt he i
nconsi
stentwiththePPSA:
Phili
ppines, whichshal lprov i
def ort hecreat i
on, 1.Sect i
on10oft hePropert
yRegi st
rat
ion
perfect
ion, det erminat i
on of pr iorit
y, Decree(PD1529);
establi
shmentofacent ral
izednot i
ceRegi str
y, 2.Ar ti
cle2127oftheCi
v i
lCode;and
and enf orcement of secur i
ty i nter
ests i n 3.Ar ti
cles2241,2243,and2246- 2247of
personal property,andf orot herpur poses. theCivi
lCode.
Thel awwaspassedonAugust17,2018
andbecameef fectiveonSept ember7,2018. Securit
yInterest
Howev er,thei mplement ati
onoft hePPSAshal l I
ti sa pr opert
yr i
ghtin col
lateralthat
be condi ti
oned upon t he est abli
shmentand securespay mentorot herperf
ormanceofan
operati
onoft heRegi stry. obli
gation,regardl
ess ofwhet herthe par t
ies
havedenomi nat
edi tasasecur i
tyi
nterestand
Object
iv esofthePPSA regar
dlessoft hetypeofasset.(
Sec.3, (
j))
 To i ncrease compet i
ti
v eness and t he
easeofdoi ngbusi ness. Characteri
sti
csofaSecur it
yI nterest
 To br oaden t he utili
zation ofmov able 1.Consensual Cont ract
asset sascol later
alf ormi cro,smal land 2.Accessor yObl igation
medi um ent er
prises. 3.For mal
 Tost rengthent hecr editinf r
astructureof 4.Uni l
ateralCont r
act
thePhi l
ippinesbyequi ppi ngt hefinanci al
insti
tuti
ons wi t
h a moder n centralized Gr antor
registr
yonper sonalpr oper t ytoenabl e 1.The per son who gr ants a secur ity
them t omakemor ei nformeddeci sions i
nterestincol l
ateralt osecur ei t
sown
inlending. obli
gati
o no rthat ofan o t
he rperson;
2.Abuy erorot hertransf ereeofacol lat
eral
LawsRepeal ed that acquires i t
sr ight subj ect toa
The PPSA r epealed t he Ci v i
l Code securi
tyinterest;
provi
si
onsonpl edgeandt heChat telMor tgage 3.At r
ansferori nanout righttransferofan
Law (Act1508) .I tspeci fi
callyr epealed t he accountsrecei vable;or
fol
lowing: 4.Al esseeofgoods;
1.TheChat telMortgageLaw( Act1508) ;
2.Art
icles 2085-2092 oft he Civi
lCode, Scope
i
nsof ar as mov able pr opert
y i s “Thi
sactshal lapplytoALLtr
ansacti
onsofany
concerned; form thatsecureanobl i
gat
ionwithmov able
3.Art
icles2093-2123and2140- 2141ofthe coll
ateral
,exceptinter
est
sinair
craf
tsubj
ectt o
Civi
lCode; R.A.9497andi nterest
sinshi
pssubjectt
oP. D.
4.Section 13 oft he Financi
ng Company 1521
Actof1998( RA 5980,asamendedby
RA8556) ; Object
softhePPSA
5.Sections 114- 116 of t he Pr operty Overal lformsoft angibl
eori nt
angi
ble
Registrat
ionDecree( PD1529) ;
and assetorper sonalpropert
yasdef i
nedbythe
6.Section5( e)oftheLandTr ansport
ati
on Civi
lCodeincludi
ngbutnotlimitedto:
andTr aff
icCode( RA4136) 1.Rightsar i
singfrom contract
sincl
udi
ng,
butnotl i
mitedto:
a)Secur iti
es
b)Commodi t
yContracts
 c)Lease ofgoods i ncludi
ng financial  Mor e opt i
ons bey ond 5-6t o access
leases and oper ati
ng leases fora fi
nance
per i
odofnotlesst hanone( 1)year FortheFinancialI
nstit
uti
ons
2.Equi pment  Enhanced r i
sk management–t hrough
3.Invent ory thecentral
izedregistr
y,therewil
lbeno
4.Deposi taccounts morebl i
ndsidefortheFis)
5.Negot iabl
eInstr
ument s  Lowert ransacti
oncost
6.Negot iabl
edocument soft i
tl
e  Expansi onofAgr iandMSMEpor t
foli
o
7.Consumergoods FortheWar ehouseIndustry
8.Intellectualpr
operty  Increasedaccesst ofinance
9.Livest ock  Oppor tunit
ytodiversi
fyoperati
ons
10.
Fixtur es,accessions,and commi ngled
 St r
engthen credibil
it
y and roleint he
goods
val
uechai n
11.
Fut urepr oper
tyorafter-
acquiredassets
FortheNat i
onasawhol e
Pr
ovi
ded:asecuri
tyint
erestcanonl
ybe
 • I
ncr ease pr oductivi
ty and mor e job
cr
eat
ed on t
he assetov erwhich the
creationt hroughMSMEs, agr
icultureand
gr
ant
orhasalegalr
ight
fi
sher ysect ors
 Hel p pr omot er uraland v alue chai n
Overal
lFramewor k
devel opment t
owar d i
ncr easing
1.Creati
on and Per fecti
on of Secur
ity
agricultural and r ural ent erpri
se
Int
erest
product ivi
ty
2.Clearpriori
tyrules,f
oreclosur
e
 Pr omot e f inancial independence f or
3.Enforcement
everyhar dwor kingFi l
ipinoent repreneur
4.Registry
andf armer
KeyProvi
sions  Hel p increase the Phi l
i
ppi nes’
 Lessf or
mal r
equirements compet it
iveness and ease of doi ng
business–( Not e:Passageoft heActwi l
l
 FuturePr opert
iesUtili
zed
upgr adet henat ion’sranki ngint hedoi ng
 SimplerDescr i
pt i
ons
business l egalr i
ghtsi ndex –r anking
 Creati
onofmoder n,centr
ali
zedr
egi
str
y
fr
om 3outof12t oatleast10outof12)
 ClearrulesonPr i
ori
ti
zati
on
 Mor eenf or
cementopt i
ons HowSecur ityInterestCr eated
I
tmaybecr eatedintwoway s:
KeyBenef i
ts 1.Byasecur ityagreement
FortheMSMEsandFar mer s Secur i
tyagr eementi sal
socr eatedbyan
 Wi tht he br
oad r ange of accept able accountr eceivable,unlessotherwi
sest ipul
ated
assets as col l
ateral,i twillr esul
tt o byallpartiesinthedocumentofsal e.
i
ncreasedaccesst of i
nanceforMSMEs, 2.Leaseofanoper ati
ngleasef ornotless
Farmer s and Fi sher s (to expand thanone( 1)y ear
businessorincreasepr oduct
ivit
y)
 Wi tht hecentral
izedsy stem,fasterloan Conti
nui
tyofSecur i
tyInterest
processingisant icipatedwithlesst i
me Asecuri
tyint er
estcreatedunderthePPSAshal
l
spentbybanksonduedi li
gence conti
nueint hecoll
ateralnotwit
hstandi
ng:
 Suppor tgr
owthofMSMEs- from ast ar
t 1.1.Sale;
uptoamor esust ainablebusiness 2.2.Lease;
3.3.Li
cense;
 4.4.Exchange; 3.Asecur i
tyagr eementmaypr ovi
dethata
5.Otherdisposit
ionofthecol
lat
eral securi
tyi nterest inat angi
ble asset
Exceptasotherwiseprovi
dedintheRulesoras extendstoi t
sr epl
acement.
agreeduponbyt heparti
es. ◦ But ,itisonl yli
mit
edt othev al
ueof
the encumber ed assetimmedi at
ely
Form ofSecur ityI nterest beforeitwasr epl
aced
 Asecur it
yagr eementmustbecont ained
in a wr i
tten cont r act si gned by t he Secur i
tyInt erestOv erRi ghtt oPr oceedsand
par ties; Commi ngledFunds
 I tmusti dent ifyt he col l
ateraland t he 1.A secur i
tyi nter esti nper sonalpr oper ty
secur edobl i
gat i
on; and shal l ext end t o i ts i dent ifi
abl e or
 I tmayconsi stofoneormor ewr it
ings traceabl epr oceeds.
t hat,t akent oget her ,est abl
isht hei nt ent 2.Wher e pr oceedsi nt he f or m off unds
of t he par ti
es t o cr eated a secur it
y credi tedt oadeposi taccountormoney
inter est . are commi ngl ed wi th ot herf unds or
 The Secur i
ty agr eement shal l al so money :
pr ov idef ort hel anguaget obeusedi n i.i tshal lext end t ot he commi ngled
agr eement sandnot ice. moneyorf unds, not withst andi ngt hat
 Thegr ant orshal lbegi vent heopt iont o the pr oceeds hav e ceased t o be
hav et heagr eementandnot iceinFi li
pino. i
dent i
fiabl et ot heext entt heyr emai n
 TheDepar tmentofFi nanceshal lprepar e traceabl e.
model secur i
ty agr eement s i n pl ain ii
.The secur it
y i nt
er est i n t he
Engl ishandFi l
ipi no. commi ngl edf undsormoneyshal lbe
l
imi tedt ot heamountoft hepr oceeds
i
mmedi at ely bef ore t hey wer e
Descript i
onoft heCol later al
commi ngl ed; and
It i s suf fi
cient i f i n t he secur it
y
ii
i.I fatanyt i
meaf terthecommi ngl ing,
agreement and/ or r egi strati
on not ices,
thebal ancecr editedt ot hedeposi t
coll
aterali sr easonabl yi dent ifi
ed.A speci fi
c
account or t he amount of t he
defi
nitioni snotr equired.
commi ngl edmoneyi sl esst hant he
A descr iption such as “ al lper sonal
amountoft hepr oceedsi mmedi ately
property ”
,“ al lequi pment ”,“ allinvent ory”or“ all
bef oret hey wer e commi ngled,t he
personalpr oper tywi thinagener iccat egor y”of
secur ityi nt erestshal lbel imi t
ed t o
thegrant orshal lbesuf ficient
the l owest amount of t he
commi ngl edf undsormoney .
SecurityI nt erestOv erFut ur ePr oper t
yoraf t
er -
acquiredasset s
Securi
ty I nterest Ov er Tangi ble Asset s
1.Thesecur it
yagr eementmaypr ov i
def or
Commi ngledi naMass
its cr eat i
on. Howev er,t he secur it
y
1.A secur i
tyi nt eresti nat angi bleasset
inter esti nt hatpr oper tyiscr eatedonl y
thati scommi ngl edi namassext endst o
whent hegr ant oracqui resr i
ght sini tor
themass; and
t hepowert oencumberi t
2.Secur i
tyi nt erestt hatext endst oamass
2.Asecur it
yagr eementmaypr ovi
det hata
isl imi ted t ot he same por tion oft he
secur i
tyi nteresti nat angibleassett hat
massast hequant it
yoft heencumber ed
ist ransf ormedi ntoapr oductext endst o
assetbor et ot hequal ityoft heent ir
e
t hepr oduct .
massi mmedi atelyaf tercommi ngling.
◦ But ,i ti sonl yl imi tedt ot hev alueof
the encumber ed asseti mmedi ately
bef or ei tbecamepar toft hepr oduct .
Securi
ty I nterest i n Cer tain Account s 1.Regi st
r at
ion of the notice wi t
h the
Recei
vable registrybutt hesecur i
tynotr egi
ster
ed
1.Itshal lbeef f
ect i
v enot wi thstandingany remai nsv al
idbet
weent heparties;
or
agr eementbet weent hegr antorandt he 2.Possessi on, whet her act ual or
accountdebt ororanysecur edcr editor const ructi
ve, ei
ther by t he secured
li
mi tingi nany wayt hegr ant ors’rightt o creditororadeposi tar
yact i
ng forthe
creat e a secur ityi nter est. Pr ovided: l
atter .
Not hingi nt hissect ionaf fectst her ight Provi
ded:t he debt orort he grantorcannot
ofabuy ertocr eat easecur it
yi nterest possesst hecol l
ater
ali
nbehal fofthesecured
overt he accountr ecei v able.And any credi
tor.
release of i nfor mat ion i s subj ect t o
agr eementonconf ident iality
. I
ntangi
bleAsset
2.Thi ssect ionshal lappl yonl yt oaccount s 1.Registr
ati
on of the notice wit
h the
recei vablearisingf rom: Registr
ybutt hesecuri
tynotregi
ster
ed
i. cont r
actf ort hesuppl yorl easeof remainsvali
dbetweenthepart
ies;
or
goodsorser vicesot hert hanf inanci al 2.conclusi
onofControlAgr
eement.
services;
ii
.a const ruction cont ractorcont r Secur
act i
tyInter estinI nt ermedi atedSecur i
tiesor
forthesal eorl easeofr ealpr oper Deposi
ty; tAccount s
and 1.Regi stration of t he not i
ce wi t
h t he
ii
i.a cont r
actf ort he sal e,lease or Regi strybutt hesecur itynotr egister
ed
li
censeofi ntellectual proper t
y. remai nsv ali
dbet weent hepar ti
es;
2.Cr eationoft hesecur ityI nteresti nf avor
Tangi ble Asset s wi t
h Respect t o whi ch o ft hed e posit-taking ins tit
ution o rth e
Intell
ectualPr oper t
yisUsed intermedi ary;or
The i nterestdoes notext end tot he 3.Concl usi onofcont rolagr eement .
i
ntellectualpr oper t
yandasecur i
tyint
eresti n
thei ntel
lectualpr opertydoesnotext endt ot he Securi
tyInteresti nEl ectronicSecur iti
es
tangibleasset . 1.Regi stration of t he not i
ce wi t
h t he
Regi strybutt hesecur itynotr egister
ed
ExtinguishmentofSecur it
yInter est remai nsv ali
dbet weent hepar ti
es;
The Secur i
tyi s extinguished when al l 2.Execut i
on of a cont r ol agr eement
secur edobl igationhav ebeendi schargedand bet ween t he gr antor and secur ed
there ar e no out st
anding commi tmentst o creditor ;or
extendcr editsecur edbyt hesecur i
tyint
erest. 3.Cont rol ,throughnot ationofasecur ity
interesti nthebooksmai nt ai
nedbyoron
Secur it
yInterest; HowPer f
ected behal foft hei ssuerf ort hepur poseof
 on per f
ection, a secur ity interest recor dingt henameoft hehol deroft he
becomesef f
ect i
veagai nstthir
dparties; secur ities.
 a secur it
yi nt
erestshal lbe per f
ect ed
when i t has been cr eated and t he Securi
tyI nter esti nI ntermedi at ed El ectronic
securedcr edit
orhast akenoneoft he Securi
ti
es
acti
onsundert helaw. 1.Regi stration of t he not i
ce wi t
h t he
Regi strybutt hesecur itynotr egister
ed
MeansofPer f
ect i
on remai nsv ali
dbet weent hepar ti
es;or
Tangi bleAsset 2.Theexecut i
on ofa cont rolagr eement
bet ween t he i ntermedi ar y,t he gr antor
andsecur edcr edi t
or .
Dispositi
on of per fect
ed Secur ity Interest Speci
alRulesast oPr i
orityofSecurityInt
erests
BeforeDef ault 1.ForIntangi bleAsset s
1.Tr ansfereeExcept i
ons–anypar tywho This cov er s asset s such as,butnot
obtains, in t he ordi
nar y course of li
mitedt o,deposi taccounts,investment
business, any mov able pr operty property, el
ect r
onic securit
ies,
containi
ngasecur i
tyinterestshalltake commodi tycont ractsandr eceiv
ables.
thesamef r
eeofsuchsecur it
yprov i
ded 2.ForTangi bleAsset s
hewasi ngoodf ai
th.Ifregister
edpr ior This cov er s asset s such as money ,
toobt ai
ningt hepropert
y ,nosuchgood securi
ty certifi
cates, negoti
able
fai
thshal lexi
st. document s,andl i
v est
ock.

Per
fect
ioninPr oceeds Pr
iori
tyRulesf orIntangibleAsset s
1.Bef oredef ault,secur i
tyshal lextendt o Or
derofPr iorit
yAmongDeposi tAccount s:
proceedsoft hecol l
ateralwithoutfurther 1.Anyr ightst o set-offt hatt he deposit
-
actand be cont i
nuousl y perfected if taki
ngi nstit
utionmayhav eagai nstthe
proceedsar eint hefor m of: grantor ’
sr i
ght to pay ment of f unds
i
. money creditedt oadeposi taccount .
i
i.account sr eceivable 2.Thoset owhi cht hesecur edcredi t
oris
i
ii.negotiabl einstrument s;or the deposi t-
taki
ng i nsti
tution or t he
i
v .deposi taccount s int
ermedi ary
.
2.Bef ore def ault,i ft he pr oceeds ar e 3.Thoseper fectedbyacont r
ol agr
eement .
diff
erent f rom t he t hings ment i
oned ◦ Or dershal lbe det ermined on t he
abov e,thesecur it
ymustbeper fected basi soft hetimeofconcl usi
onoft he
withi
nf if
teen( 15)day saf terthegr antor cont rolagreement s.
receivessuchpr oceeds;ot herwise,t he 4.Perfect i
onbynot ationi nt hebooksor
secur i
tyinteresti nsuchpr oceedsshal l perfect i
onbyr egistrati
onofanot icein
notbeef fect i
veagai nstt hi
rdpar ti
es. theRegi stry.

PriorityofSecur it
yI nterest OrderofPr iorityAmongEl ectroni
cSecur i
ti
es
Theser ulesar ei mpor tantindet ermi ning NotHeldWit hAnI ntermediary
:
whi choneoft heconf l
ictingsecur i
tycr editors 1.Thoseper fectedbynot ationinthebooks
i
sent i
tledt ocommenceort otakeov ert he ofthei ssuer .
enfor cementpr oceedi ngs overthesecur it
y 2.Thoseper fect edbyt heconcl usi
onofa
i
nter est. control agreement .
As a gener alr ule,pr iori
ty ofsecur it
y ◦ Or dershal lbe det ermined on the
i
nter ests on t he same col lat
eralshal lbe basi soft het i
meofconcl usionofthe
deter mined accor ding t o t he t i
me of cont rolagr eements.
registrationofanot iceorper fecti
onby ot her 3.Those per fect ed by regist
rati
on ofa
means. noti
cei nt heRegi stry
.
Exampl e:Two secur i
tyi nterests,bot h
perfect edthroughr egi strationofanot icei nt he Pr
iori
tyRulesforTangi bleAssets
Regi stry,arecreatedov ert hesamev ehicle.The Or
derofPr iori
tyAmongSecur i
tyCerti
fi
cates
notice t hatwas r egist ered ear li
ershal lhav e 1.Those per fected by t he secured
pri
or ityov erthenot icer egisteredsubsequent creditor
’spossessi onofthecert
if
icat
e.
toit. 2.Those per fected by registr
ati
on ofa
noticeintheRegi stry
.
OrderofPr i
orityAmongNegot iableDocument s Regi strationofNot i
ce
1.Thoseper fect ed bypossessi onoft he Requi sitesofani nitialnot i
ceofsecur it
y
inst rumentort henegot iabledocument . inter est:
2.Those per fect ed by r egist ration ofa a)I dent i
fies t he gr ant orby i dent i
fi
cation
not icei nt heRegi st ry . number ;
b)I dent i
fies t he secur ed cr editor,orhi s
TheRegi stry agent ,byname;
The Land Regi st rat i
on Aut hor ity shal l c)Pr ov ideanaddr essf ort hegr antorand
establish and admi nist er t he cent r
alized, secur edcr edi torori tsagent ;
nationwi de r egi stry ,whi ch shal lcont aint he d)Descr i
best hecol lat eral
;
foll
owi ngi nformat ion: e)St atest hedur ati
onofef fectivit
yoft he
1.I nitialnot i
ceofsecur it yint erestandl i
en secur it
yi nter est ;and
inper sonal pr oper t
y . f) Thepr escribedf eehasbeent ender ed,or
2.Amendment not ice pr ov iding new an ar rangement has been made f or
infor mat ionofcont i
nui ngt heper i
odof pay mentoff eesbyot hermeans.
ef fectivenessofani nitial not ice. Whenal lthesear epr esent ,theRegi strycannot
3.Ter mi nat ionnot i
ce. refuset or egistert hei nitialnot iceofsecur it
y
i
nter est.
Itshal lpr ov ide el ect ronic means f or
registrationandsear chi ngofnot ices.TheLRA AmendmentorTer mi nat ionofNot ice
i
st heagencyt askedwi thi ssui ngt henecessar y A not ice may be amended by t he
guidelinesont heuseandmanagementoft he r egistrationofanamendmentnot icet hat:
Regi stry. a)I d en ti
fies th e in iti
al n otice b y its
The el ect roni cr ecor dsoft he Regi stry regi strationnumber ;and
are consi dered publ i
cr ecor ds and may be b)Pr ov idesnewi nfor mat i
on.
sear chedandexami nedbyanyper sonHowev er
,
thepr ocessi ngofi nf ormat ionshal lbemadei n Itmaybef il
edby :
accor dancewi tht heDat aPr iv acyAct . a)Secur edcr edi toral one-ift hechangest o
The dut i
es of t he Regi st r
y shal lbe thesecur it
yi nt erestcanbeef f
ectedwi th
mer elyadmi nistrat ivei nnat ur e.Byr egi st eringa thesol econsentoft hesecur edcr editor;
noticeorr efusingt or egi st er ,theRegi st rydoes or
not det er mine t he suf fici ency ,cor r ectness, b)Gr ant or -ift he changes r equi r
et he
authent icity,orv alidityofanyi nfor mat ioni nthe gr ant or’sconsent .
notice, ort hev al idityoft hesecur i
tyagr eement .
The per i
od of ef fectiveness may be
Whyi st heRegi st ryi mpor tant ? cont i
nuedbyr egist er i
nganamendmentnot ice
Under Sect ion 68 of t he PPSA,t he whi ch mustbe r egi ster ed wi thin 6 mont hs
i
mpl ement ationoft heActshal lbecondi tioned bef or et heexpi rat
ionoft henot i
ce.
upon t he Regi stry bei ng est abl ished and
oper ati
onal .Wi thoutt he Regi stry ,t he PPSA Whenmayt hegr ant ordemandamendmentor
cannotbei mpl ement ed. termi nat i
onofanot ice:
 AsofFebr uar y2020,no Regi st ryhas 1.Al lt he obl igat i
ons undert he secur it
y
beenest abl i
shedbyt heLRA.TheLRAi s agr eement t o whi ch t he r egistr
ation
tar getingt ol auncht heRegi strybymi d- relat eshav ebeenper f
ormedandt hereis
May2020. no commi tment t o make f uture
adv ances;
 2.The secured cr edi
tor has agr eed to Sec.46—Ri ghtoft heHi gher -RankingSecur ed
rel
easepartoft hecoll
ater
aldescr i
bedin CreditortoTakeOv erEnforcement
thenoti
ce; Thehi ghest-
rankedsecur edcreditoror
3.The coll
ateraldescribed i
nt he noti
ce thecredi t
orwi t
hasecur ityi nt
erestthathast he
i
ncludesani tem orkindofpr opertyt
hat highestpr i
ori
ty overot hersecur it
yi nterests
i
s nota col l
ateralundert he securit
y exercises t he right of enf orcement ei ther
agreement; throughr ecovery,di
spositi
on, orr et
enti
on.
4.No securit
yagr eementexi stsbet ween ThePPSAdoesnotpr ohi bi
tthosewi th
thepart
ies;or l
ower pr i
ori
ty to commence enf orcement .
5.Thesecur i
tyagr eementisext ingui
shed Howev er,thePPSA r eserv est her i
ghttot ake
i
naccordancewi tht
hePPSA. overenf orcementt othehi gherr anki
ngsecur ed
credit
or .
Upon r ecei pt of t he demand f or
amendmentort ermi nat i
on, t
hesecur edcr edi
tor Exampl e
mustr egi steranot i
cet oamendort ot er minate  A secur i
tyi nter est i n an i nst r
ument
thenot icewi t
hin15wor kingday s. perf ect ed by possessi on > a secur i
ty
I
ft hesecur edcr edi torf ai lst o compl y i
nter esti n an i nst rumentper fect ed by
within15wor kingday s,t heper songi v i
ngt he regist ration.
demandmayaskt hecour tt oi ssueandor der  Aper fect edsecur i
t yi nterestinl ivest ock
terminat i
ngoramendi ngt henot ice, whi chor der secur inganobl igat ioni ncurredt oenabl e
i
sconcl usi v
eandbi ndingont heLRA. thegr ant ort oobt ai nf oodormedi cine
Howev er , i f t he secur ed cr edi
tor fort he l ivest ock > anyot hersecur i
ty
disagreeswi t
ht heor der, hemayappeal . i
nter esti nt hel i
vest ock.
The LRA shal lamend ort ermi natea
noticei naccor dancewi tht hecour tor deras Expedi tedRepossessi onoft heCol lateral
soonasr easonabl ypr act i
cabl e. Thisi st hesecur edcr edi t
or’
spr ivil
eget o
enforcet hei rsecur i
tyr ightt hroughj udicialor
Enforcement of Secur i
ty I nter est Secur ed extra-j
udici almeans,t hisi ncl udest hesal eof
Creditor’sRi ght s the secur ed asset st hr ough ei t
herpubl ic or
Sec.45–Ri ghtofRedempt ion- privat
edi sposi t
ion.
Anyper sonwhoi sent it
ledt or eceivea
notifi
cat i
onofdi sposi ti
oni sent itledt or edeem Ext ra-Judici al Repossessi on
the col lateralby pay ing orper f
or mi ng t he Sec.47—Ext ra- Judi cialRepossessi on
secured obl igat i
on i n f ull,i ncludi ng t he The secur ed cr editor may t ake
reasonabl ecostofenf or cement . possessi on oft he col l
at er alwi t
houtj udi cial
The r i
ght of r edempt ion may be pr ocessi ft hesecur i
tyagr eementsost ipulat es:
exercisedunl ess: Prov i
ded, thatpossessi oncanbet akenwi thout
1.Theper sonent itledt or edeem hasnot , abr eachoft hepeace.
afterdef ault,wai v edi nwr iti
ngt her i
ght Breach of t he peace shal li ncl ude
tor edeem. entering t hepr ivater esi denceoft hegr ant or
2.The col l
at eral is sol d or ot herwise without per mi ssion, r esor ting t o phy sical
disposedof ,acqui redorcol l
ect edbyt he viol
enceori ntimi dat i
on,orbei ngaccompani ed
secur edcr edi tor. by a l aw enf or cementof fi
cerwhen t aking
3.The secur ed cr edi torhas r et ained t he possessi onorconf rontingt hegr antor.
collateral.
I
fthecol
lat
erali
saf i
xture,thesecured
cr
edi
tormayremov ethefi
xturefrom thereal
pr
opert
ytowhichitisaff
ixedwi thoutjudi
cial
process.The secured credit
orshal lexerci
se the negotiable document or goods
duecarei nremovi
ngthef i
xture. coveredbythenegotiabl
edocument .
I
f,upon default,the secur ed credit
or 3.Inadeposi taccountmai ntainedbyt he
cannott akepossession ofcol l
ateralwi t
hout secured cr
editor
,applyt he bal ance of
breachoft hepeace,thesecur edcr edi
tormay the deposi
taccountt ot he obl igati
on
rel
yont herulesf
orjudici
alrepossession. securedbythedepositaccount .
4.Inothercasesofsecur it
yi nter
esti na
Sec.47—Judi cialRepossessi on deposit
edaccountper fectedbycont rol
,
Thesecur edcreditorshal lbeent i
tl
edto i
nstructthedeposit-
takinginst i
tutiont o
anexpedi t
edhear inguponappl icationforan payt hebalanceofthedeposi taccount
ordergranti
ngt hesecuredcr edit
orpossession tothesecuredcredi
tor’
saccount .
ofthecol l
ateral.Suchappl icationshal li
ncl
ude
astatementbyt hesecur edcr edit
or ,
underoath, Sec.49-Ri ghtst oDi sposeofCol later
al
veri
fyi
ng t he exi st
ence of t he security Afterdef ault,asecur ed cr editormade
agreementat tached tot he appl i
cati
on and sellordi spose oft he col l
ateral,publiclyor
i
dentifyi
ngatl eastoneev entofdef aul
tbythe priv
ately,ini tspr esentcondi t
ionorf oll
owi ng
debtorundert hesecurityagr eement . any commer ciall
yr easonabl e pr eparat
ion or
processing
Thesecur ed cr editorshal lpr ov idet he Hemayal so buyt hecol lateralatany
debt or,grant or ,and,i ft hecol l
ateralisaf ixt
ur e,
publicdisposition, oratapr i
vatedi sposit
ionbut
any r ealest ate mor tgagee,a copy oft he
onlyi ft he col laterali s ofa ki nd t hati s
appl i
cat i
on,i ncl udi ngal lsuppor t
ingdocument s
customar i
lysol donar ecognizedmar ketort he
andev idencef ort heor dergr antingt hesecur ed
subjectt o wi dely di st r
ibut
ed st andar d price
creditorpossessi onoft hecol l
ateral. quotations.
The secur ed cr editori s ent i
tled t o an Commer ciallyr easonable:A di sposition
ordergr ant i
ng possessi on oft he col l
ater al
i
s commer ciall
yr easonabl ei ft he secerned
upon t he cour tf inding t hata def aul thas credit
ordi sposesoft hecol l
ateralinconf ormi t
y
occur redundert hesecur i
tyagr eementandt hat
with commer cialpr acticesamong deal ersi n
the secur ed cr editor has a r i
ght t o t akethattypeofpr oper ty.Ifamet hodofdi sposition
possessi on oft he col lat
eral .The cour tmay ofcol l
ateralhasbeenappr oved i nanyl egal
directt hegr ant ort ot akesuchact ionast he
proceeding,i ti s concl usiv
ely commer ciall
y
cour tdeemsnecessar yandappr opr i
at esot hat
reasonable.
thesecur edcr edi t
ormayt akepossessi onof
thecol later al
. Notif
icati
onofDi sposi tion
Sec.51-Not ificationofDi sposi t
ion
Sec.48—Recov er yI nSpeci alCases Notl atert han10day sbef oredi sposit i
on
Upondef ault,t hesecur edcr editormay oft he collat eral,t he secur ed cr editorshal l
withoutj udi cial pr ocess: noti
fythef ollowi ng:
1.I nst ructt he accountdebt ort o make 1.Thegr ant or;
pay mentt ot hesecur edcr editor ,andt o 2.Anyot hersecur edcr editororl i
enhol der
appl ypay mentt ot hesat i
sf actionoft he who, five( 5)day sbef ore t he date
obl i
gat ion secur ed by t he secur ity noti
ficat ioni ssentt ot hegr antor ,helda
inter est af ter deduct i
ng t he secur ed secur i
tyi nterestorl ieni nt hecol lateral
credi tor ’
s reasonabl e col lection thatwasper f
ect edbyr egistr
ation; and
expenses. 3.Any ot her per son f rom whom t he
2.I n a negot iabl e document t hat i s secur edcr editorr eceiv
ed not i
ficationof
per fect edbypossessi on,pr oceedast o aclai m ofani nteresti nthecol l
aterali f
thenot i
fication wasr eceivedbef ore
 thesecuredcredi
torgav enoti
fi
cat
ionof l
esseeorl icenseeshallbeent i
tledt othe
the pr oposed di sposit
ion to t he benef i
toft hel easeorl i
censedur i
ngi t
s
grantor
. term.
Thegr
ant ormaywaivetherighttobenoti
fi
ed. 3.Ifa secur ed cr edi
torsells,leases or
l
icensest hecol l
ater
alnotincompl i
ance
Anot ificat i
onofdi sposi ti
oni ssuf ficient witht hisChapt er,t
hebuy er
,l esseeor
i
fi ti dent if
ies t he gr ant orand t he secur ed l
icenseeoft hecollat
eralshal lacqui r
e
creditor;descr ibes t he col l
ateral;st ates t he the r ights or benef its descr ibed in
met hodofi nt endeddi sposi ti
on;andst atest he subsect ions( a)and( b)oft hi
ssect ion:
ti
meandpl aceofapubl i
cdi sposi ti
onort he Prov i
ded,Thati thadnoknowl edgeofa
ti
meaf t
erwhi chot herdi sposi tioni stobemade. viol
at i
onoft hi
sChapt erthatmat eri
ally
Ther equi rementt osendanot if
icat ion prejudicedt her i
ght
soft hegr antoror
under t his sect ion shal lnot appl yi ft he anot herper son.
coll
at erali sper ishabl eort hreatenst odecl ine
speedi lyinv alueori sofat ypecust omar il
ysol d Ret enti
onofCol lateral bytheSecur edCr editor
onar ecogni zedmar ket. Sec.54—Ret ent ionofCol l
ateralbyt heSecur ed
Credit
or
Sec.52—Appl i
cat ionofPr oceeds Afterdef ault,t hesecur edcr editormay
The pr oceeds ofdi sposi ti
on shal lbe pr oposet ot hedebt orandgr ant ort ot akeal lor
appliedi nt hef oll
owi ngor der : part of t he col l
ater al in t ot al or par tial
1.The r easonabl e expenses of t aki ng, sat i
sfactionoft hesecur edobl i
gat i
onandshal l
hol ding,pr epar ing f ordi sposi t
ion,and sendapr oposal to:
disposi ng of t he col lateral,incl udi ng 1.Thedebt orandt hegr antor
reasonabl e at tor ney s'f ees and l egal 2.A nyo th er secu redc redit
ororl ienhol der
expenses i ncur red by t he secur ed who,f ive day s bef oret he pr oposali s
credi tor . sentt ot he debt or and t he gr antor,
2.The sat i
sf action of t he obl igat ion per fect ed i ts secur i
ty i nterest by
secur edbyt hesecur i
tyi nterestoft he regist ration
enf orci ng secur ed cr editor;and The 3.Anyot herper sonwi thani nter estint he
sat i
sf act i
on ofobl i
gations secur ed by collater al who has gi v en wr i
tten
anysubor di natesecur ityi nter
estorl ien not i
ficat ion t o t he secur ed cr edi t
or
int hecol l
at erali fawr i
ttendemandand bef oret hepr oposali ssentt ot hedebt or
proofoft hei nt erestar er eceivedbef ore andgr ant or
dist ri
but ion of t he pr oceeds i s
compl eted. The secur ed cr edit
ormay r etai
nt he
The secur ed cr editor shal laccountt ot he col l
ateralint hecaseof :
grantorf oranysur plus,and,unl essot her wi se 1.A pr oposalf ort he acqui sition oft he
agreed, thedebt ori sl i
abl eforanydef i
ciency . collater al i n f ull sat i
sf act i
on of t he
secur ed obl igat i
on,unl esst hesecur ed
Sec 53—Ri ght s of Buy ers and Ot herThi rd credi torr ecei vesanobj ect ioni nwr it
ing
Parties from anyper sonent it
ledt or ecei vesuch
1.I fasecur edcr edi torsel l
st hecol later al apr oposalwi thint went y( 20)day saf t
er
under t his Chapt er,t he buy er shal l thepr oposal issentt othatper son.
acqui r et hegr ant or ’
sr ighti nt heasset 2.A pr oposalf ort he acqui sition oft he
freeoft her i
ght sofanysecur edcr edi tor collater ali n par ti
alsat isfact i
on oft he
orl ienhol der . secur edobl igat i
on,onl yi ft hesecur ed
2.I fasecur edcr edi torleasesorl icenses credi torr eceiv est heaf fi
rmat iveconsent
the col l
ater alundert his Chapt er,t he ofeach addr essee oft he pr oposali n
 wri
ti
ngwithi
ntwenty(20)daysaftert
he PPSARule:
pr
oposal
issenttothatper
son. Asecuri
tyi
nter
estofmovabl
epropert
yis
nowcreat
edbyasecur i
tyagr
eementwri
ttenby
Li
stofAmendedChapter
sandPr ovi
sions thepar
ti
es.[
Sec.5(
a),PPSA]

IntermsofPERFECTI ON.
NCCRul e:
I
npl edge,t hecont ractmustappeari na
publi
ci nstr
umentt obeef f
ecti
veagainstt hird
parti
es.[Art.2096, NCC]
I
n pl edge,t he instrumentpr ov i
ng t he
i
ntangiblerightorpr opertymustbedel iveredt o
thecreditor,andifnegotiable,mustbei ndorsed.
[Ar
t.2095]
PPSARul e:
Asecur i
tyi
nt er
estmaynowbeper fected
byRegist r
ation,Possession, orContr
ol.[Sec.12]
Registrati
on orCont rolissuf f
icientt o
secureani nt angi
bleasset .[Sec.12,paragr aph
3,PPSA]Possessi onofpr oofisnotnecessar y.

I
n t erms of DEFAULT AND SUBSEQUENT
DISPOSI TIONBYCREDI TOR.
NCCRul e:
Af t
erdef ault,thecr edit
orcanonl ysell
the t hing pl edged i n a publ i
c auction af t
er
proceedi ngwi ththeNot aryPubl i
c.[Art
.2112]
PPSARul e:
PPSAv .Ar t
s.2085- 2123(CommonPr ov
isi
ons Af t
erdef ault,secur edcr edit
ormaysel l
andPl edge) orot her wisedi sposet hecol l
ateralpubli
clyor
In t erms of OWNERSHI P AT TI ME OF pr i
vat ely.[Sec.49, PPSA]
PERFECTI ON.
NCCRul e: PPSAv .Art.2127( Mor tgage)
Pledgor/ Chatt
elmor t
gagormustbet he In t erms of NATURAL ACCESSI ONS,
absoluteowneroft hethi
ngpledged/ mort
gaged. I
MPROVEMENTS, FRUI TS, etc.
[Art
.2085( 2),NCC] NCCRul e:
PPSARul e: Mor tgage ext ends t o t he nat ural
A secur ityagreementcannow pr ovi
de accessi ons, impr ov ement s,growingfruit
s,rents
forthecr eati
onofasecur i
tyint
erestinafut
ure ori ncome noty etr eceived atmat uri
ty,and
property,providedthatasecur i
tyinter
estmust amount of i ndemni ty whet her the est ate
becr eatedwhenbor roweracquirestheri
ghtor r emai nsi nt hepossessi onoft hemor tgagoror
thepowert oencumberi t.[
Sec.5(b),
PPSA] passesi ntot hehandsofat hirdperson.[ Art
.
2127,NCC]
I
nt ermsofCREATION. PPSARul e:
NCCRul e: Mort
gageisnow consi
deredassecur
it
y
I
n pledge,t
he thi
ng pl
edged mustbe interest
.
placedinthepossessionofthecr edi
torora
thir
dpersonbyagreement.[
Art
.2093,NCC] PPSAv .Art
.2140-
2141(
Chat t
elMort
gage)
IntermsofREGI STRY. Asagener alrule,theprior
ityofsecurit
y
NCCRul e: i
nterestsandl i
ensi nt hesamecol lat
eralshall
Per sonal property under a chat t
el bedet er
minedaccor dingt oti
meofr egist
rat
ion
mor tgage mustbe r ecorded int he Chat t
el ofa not i
ce orper fection by othermeans,
Mor tgageRegi st
ertosecuretheobligat
ion.[Art
. withoutregardtot heor derofcr eati
onoft he
2140, NCC] securi
tyinter
estsandl i
ens.[Sec.17,PPSA]
PPSARul e:
A new Regi str
yt o beest abli
shed and PPSAv .Ar t.2246-2247( OrderofPr eferenceof
admi nister edbytheLandRegi st
rati
onAut hori
ty Credi t
s)
now gov er nstheregi
strati
onandr ecordingof Inter msofPREFERREDCLAI MSORLI ENS.
notice ofany secur i
tyi nt
erestofper sonal NCCRul e:
proper t
y.[ Sec.26,PPSA;Sect ion5.01,PPSA Ift here aret wo ormor e credits with
IRRFi nal Dr af
t] respectt ot he same mov able proper t
y ,then
theyshal lbesat isfi
edpr or ataaf t
erpay ingthe
In terms of APPLI CABI LITY OF PLEDGE duties,t axesandf eesduet ot heSt ate.[Art.
PROVI SIONS. 2247, NCC]
NCCRul e: PPSARul e:
Asl ongasi tisnoti nconf l
i
ctwi ththe Asagener alrule,thepr iori
tyofsecur it
y
ChattelMor tgageLaw, t
hepr ovi
sionsonpl edge i
nter estsandl i
ensi nt hesamecol l
ateralshal l
shallbeappl i
cabletochat telmortgages.[Art
. bedet ermi nedaccor dingt ot i
meofr egist r
ati
on
2141, NCC] ofa not i
ce orper fection by ot hermeans,
PPSARul e: withoutr egar dtot heor derofcr eationoft he
ThePPSAi snow thepr imarysour ceof secur i
tyi nterestsandl i
ens.[ Sec.17, PPSA]
provisi
ons per tai
ning t
o secur i
tyinterestsin
realpropertyast heChat t
elMor tgageLawand
the provisi
ons ofpl edge ar e now amended.
[Sec.66(a)(b),PPSA]

PPSAv .Ar t
.2241( Classifi
cat i
onofCr edits)
IntermsofPREFERREDCLAI MSORLI ENS.
NCCRul e:
Therei saf i
xed set of cr edit
s on
mov abl epr opert
iespr eferr
edbyl aw,suchas
duties,taxesandf eesduet ot heSt ate,claims
ari
singf rom misappr opri
ation,breachoft r
ust
,
ormal feasance ofpubl i
c of f
ici
als,et c.[Art
.
2241, NCC]
PPSARul e:
A new cl assif
icati
on of cr edits is
available,withadi sti
nctiononpr i
or i
tybet ween
tangibleandi ntangibl
easset s.

Inter
msofPREFERREDCLAI MSORLIENS.
NCCRul e:
Cl
aims ar
e consi
der
ed as pl
edges or
chatt
elmor t
gages;wi
thtaxeshavi
nghighest
pri
ori
ty.
PPSARul e: